Hospitals and health systems may have viewed ambulatory surgery centers as minor competitors or market disruptors in the past, but the evolving healthcare landscape is shifting the way these larger providers view the outpatient setting.
At the Becker's Hospital Review 6th Annual Meeting, a panel of healthcare industry experts moderated by Kate Carow, MBA, FACHE, principal of Carow Consulting, shared insight into four of the most common ASC alignment strategies at play in the market today.
1. Joint ventures and acquisitions. Hospitals are buying existing surgery centers and even partnering with physicians to build new joint venture centers. Many centers that have been independent for years are looking to large hospitals and health systems for strategic partnerships. "In markets with narrow networks, ASCs are trying to keep referrals in their network," says Luke Lambert, CFA, CASC, CEO of Ambulatory Surgical Centers of America. "We have seen joint ventures to be attractive. This structure keeps affiliated physician practices in the flow of referrals."
In the case of Mississippi Valley Surgery Center & Endoscopy Center in Davenport, Iowa, a joint venture was the clear path. "We had been independent for 16 to 17 years, but we saw the ramp up of narrow networks. We know we would want a local and a national partner," said Michael J. Patterson, FACHE, president and CEO of Mississippi Valley Health. The surgery entered into a three-way partnership with a local health system and a national ASC management and development company. These three-way joint ventures are only growing in popularity.
2. Mergers. While not as common as joint ventures, mergers are emerging as an ASC alignment trend. "There have been opportunities to bring two or more underutilized facilities together with a hospital or health system," said Mr. Lambert.
Whether through an acquisition, joint venture or merger, hospitals are seeing ASCs as a valuable tool to not only align with physicians, but also push forward in the new era of value-based care. "Hospitals need to look at how ASCs can allow them to compete in this new value-based era," said Jeffry Peters, MBA, president of Surgical Directions. "Hospitals need to look at the data and assemble it to prove to payers they have better outcomes and lower costs." ASCs are the ideal vehicle for delivering that high-quality, low-cost formula.
3. Surgical homes. While ASCs are aligning with hospital and health systems, many centers are also exploring strategic partnerships with other organizations. "There is a real niche for ASCs in the surgical home space, particularly in orthopedics and colorectal surgery," said Mr. Peters.
4. Bundled payments. ASC leaders are also reaching out to payers to form innovative payment structures, such as bundled payments. "If you ask hospital executives how much it costs to do a total joint in their hospital, they will have no idea," says Mr. Patterson. "ASCs do a much better job of understanding their costs." This ability to understand and manage costs makes ASCs ripe for the bundled payment structure.